French Consulting Pty Ltd v Lawson Stuart Donald

[2011] NSWSC 584

Supreme Court

New South Wales

Medium Neutral Citation:

French Consulting Pty Limited v Lawson Stuart Donald [2011] NSWSC 584

Hearing dates:

16 June 2011

Decision date:

16 June 2011

Before:

Hallen AsJ

Decision:

1. It is not appropriate to proceed to hear the assessment of damages ex parte.

2. At the request of the Plaintiff, adjourn the matter to the Registrar's List on Wednesday, 7 December 2011.

3. Make no order as to the Plaintiff's costs of today, to the intent that it will bear its own costs.

Catchwords:

First Defendant did not enter an appearance or file a defence to statement of claim - Judgment on issue of liability entered in favour of the Plaintiff, against the first Defendant, leaving assessment of damages sought against the first Defendant outstanding - No appearance by, or on behalf of, the first Defendant on trial for assessment of damages - Whether appropriate to hear assessment of damages claim pursuant to UCPR rule 29.7

Legislation Cited:

Uniform Civil Procedure Rules 2005

Cases Cited:

Anton Fabrications (NSW) Pty Ltd, Re; Bentley Smythe Pty Ltd v Anton Fabrications (NSW) Pty Ltd [2011] NSWSC 186
Brown v Bluestone Property Services Pty Ltd [2010] NSWSC 869
Cameron v Cole (1944) 68 CLR 571
Deputy Commissioner of Taxation v Clear Blue Developments Pty Ltd [2010] FCA 1223
Northumbrian Ice Cream Co Ltd v Breakaway Vending Pty Ltd [2006] NSWSC 1216
Renegade Rigging Pty Ltd v Hanlon Nominees Pty Ltd [2010] VSC 385
Smirski v Macander [2010] NSWSC 929

Category:

Principal judgment

Parties:

French Consulting Pty Limited (Plaintiff)
Lawson Stuart Donald (Defendant)

Representation:

Counsel:
Mr C R Savala (Sol) (Plaintiff)
No appearance by first Defendant
Solicitors:
Moray & Agnew (Plaintiff)
No appearance by first Defendant

File Number(s):

2009/287373

Judgment - Ex Tempore

Nature of proceedings

1. The Plaintiff, at all relevant times, carried on the business of an investor. It commenced proceedings against five Defendants, in respect of only the first, the matter has continued. (The claims against the other four Defendants were resolved, with an order made, by consent, on 16 June 2010, discontinuing the claims and the cross-claims, with no order as to costs.) It is necessary, therefore, to only deal with the proceedings, so far as it relates to the first Defendant.

1. The first Defendant was, at all relevant times, an employee of Bell Potter Securities Pty Limited, which carried on the business of a stockbroker. The first Defendant acted as a client adviser.

1. The Plaintiff alleges that in about March 2006, the first Defendant arranged for a director of the Plaintiff to grant a discretionary mandate, in his favour, to conduct trades, at his discretion, on the Australian Stock Exchange, in respect of shares, on behalf, and in the interests, of clients of the Plaintiff.

1. It is asserted that between September 2005 and March 2008, the first Defendant executed 31 different irregular trades. These involved successful trades on behalf of the Plaintiff being rebooked to the first Defendant for his own interest, or the interests of persons, or entities, with whom, or which, he was associated, and unsuccessful trades made on the first Defendant's own account being rebooked against the Plaintiff's account. None of the rebooked transactions were within the authority granted by the Plaintiff.

1. As a result of the rebooked transactions, it is alleged by the Plaintiff that it suffered a total loss of $1,834,910.36. Following the return of some funds to the Plaintiff, the actual loss suffered by the Plaintiff is now alleged to be $1,759,879.80. Interest, prior to judgment, calculated at the rates prescribed by the Uniform Civil Procedure Rules 2005 ("UCPR"), is sought also. The interest calculated is $448,271.07 as at 19 October 2010.

The First Defendant's Lack of Involvement in the Proceedings

1. Although the first Defendant was served with the statement of claim filed on 30 January 2009, he did not enter an appearance (UCPR rule 6.9) or file a defence to the statement of claim (UCPR rule 14.3). Pursuant to UCPR rule 6.1, he would have been unable to take any step in proceedings (including any appearance in court) without the leave of the court. He was not an "active party" in the proceedings (UCPR rule 1.2).

1. Judgment on the issue of liability was entered, pursuant to UCPR rule 16.7, in favour of the Plaintiff, against the first Defendant, on 15 June 2009. This left outstanding the assessment of damages sought against the first Defendant.

1. In view of the fact that since 16 June 2010, there are no proceedings remaining on foot against any other party, the proceedings against the first Defendant could proceed to trial for assessment of damages: UCPR rule 30.1. The trial before me relates to that assessment of damages.

1. By virtue of the first Defendant not pleading to any of the paragraphs in the statement of claim, he is taken to have admitted the matters pleaded in each of those paragraphs: UCPR rule 14.26(1).

The Trial for Assessment of Damages

1. There was no notice of motion by which the trial of the assessment of damages came to be listed. It had been, initially, listed before me on 16 December 2010, but that date was vacated, at the Plaintiff's request, because notice of the trial date had not been given to the first Defendant. There were then several mentions before the Registrar, at none of which the first Defendant appeared.

1. On 5 April 2011, the Registrar again listed the assessment of damages, before me, on 16 June 2011.

1. The matter was called outside court this morning. There was no appearance by, or on behalf of, the first Defendant.

1. Rule 29.7 of the UCPR, relevantly, provides:

"29.7 Procedure to be followed if party is absent

(1) This rule applies when a trial is called on.

(2) If any party is absent, the court:

(a) may proceed with the trial generally or so far as concerns any claim for relief in the proceedings, or

(b) may adjourn the trial.

..."

1. The clear purpose of UCPR rule 29.7 is the efficient dispatch of Court business. However, in despatching Court business, I cannot ignore the right of a defendant to be informed, or, at least, to be made aware, of a trial date. It is a fundamental principle that a party who may be adversely affected by the making of court orders has a right to be heard: Cameron v Cole [1944] HCA 5; (1944) 68 CLR 571, in which Rich J said (at 589):

"It is a fundamental principle of natural justice, applicable to all courts whether superior or inferior, that a person against whom a claim or charge is made must be given a reasonable opportunity of appearing and presenting his case. If this principle be not observed, the person affected is entitled, ex debito justitiae, to have any determination which affects him set aside, and a court which finds that it has been led to purport to determine a matter in which there has been a failure to observe the principle has inherent jurisdiction to set its determination aside. ... In such a case that has been no valid trial at all."

1. In the circumstances, the first issue to address is whether I am satisfied that it is appropriate to proceed in the absence of the first Defendant or of anyone representing him.

1. In this regard, whilst I am satisfied that the first Defendant was "absent", that is, he was not physically present at the trial and was not represented, I consider a party is "absent" within the meaning of the rule, when the trial is called on, only if it can be shown that he, or she, has knowledge, or notice, of the date of the trial, and is not physically present, or not represented. In other words, before the rule can be relied upon, there should be proof that the absent party has been given reasonable notice of, or has knowledge of, the date of the trial.

1. Therefore, in this case, it was necessary for the Plaintiff to establish that the date for the trial and that it was to then proceed, had been brought to the first Defendant's knowledge or notice.

1. It is only then, if the court exercises its discretion to proceed with the trial generally, that the plaintiff may prove its claim so far as the burden of proof lies upon it and if it proves its claim is entitled to the relief claimed and such other relief as is consistent therewith: Re Anton Fabrications (NSW) Pty Ltd; Bentley Smythe Pty Ltd v Anton Fabrications (NSW) Pty Ltd [2011] NSWSC 186 at [11].

1. The Plaintiff's solicitor, Cliff Ralph Savala, swore an affidavit on 10 May 2011, deposing to the fact that he had spoken with, and sought information from, the fifth Defendant, the wife of the first Defendant, on 31 January 2011, but that she had refused "to provide any contact details for myself or my husband".

1. Mr Savala also deposed that he served the affidavit evidence in relation to the application for final judgment to be relied upon by the Plaintiff, upon the first Defendant, at "his last known addresses by letter dated 23 November 2010 ... and by letter dated 14 February 2011..." respectively. No doubt, Mr Savala was aware of UCPR rule 10.2, which rule requires a party intending to use an affidavit that has not been filed to serve it on each other interested party not later than a reasonable time before the occasion for using it arises.

1. It would appear that Mr Savala was also aware of UCPR rule 10.5(1)(b), which rule provides that a document may be served on a person, who is not an active party, by posting a copy of the document, addressed to the person to the person's business or residential address.

1. A copy of the letter dated 23 November 2010, addressed to the first Defendant, refers to the enclosure of a copy of an affidavit sworn 19 October 2010 of Mr Savala and to a copy of an affidavit sworn 2 October 2009 of Carol Alexandra Hendry Simpson. The copy of the letter dated 14 February 2011 refers to the enclosure of a copy of the same affidavits. The last letter also refers to the matter being listed on 5 April 2011, "to list the matter for hearing on the assessment of damages".

1. There is no factual basis, in any of the affidavits, for the assertion by Mr Savala that each of the addresses shown on the letters was "the last known address" of the first Defendant, or that it was the first Defendant's business or residential address. In this regard, the address of the first Defendant shown on the statement of claim, and of the fifth Defendant on the Defence (filed by her on 14 April 2009) each identifies the same address (at Storey Street, Maroubra) as the address of the first and fifth Defendant respectively. It is that address at which the first Defendant was served with the statement of claim. However, that is not the address to which either of the letters, a copy of which was annexed to the affidavit of Mr Savala, was sent.

1. Nor is there any evidence of steps taken by the Plaintiff, its servants or agents, to ascertain the then, or subsequent, whereabouts of the first Defendant. There is a copy of a letter dated 23 November 2010, addressed to Mercantile Consulting Pty Limited, annexed to Mr Savala's affidavit, which letter states that the first Defendant "may be residing at [the Storey Street address]". A request is then made to "arrange for personal service of the letter" dated 23 November 2010 at the address referred to on the letter, "as soon as possible".

1. The "Field Report" dated 3 December 2010 of Mr Mark Mullen, of Mercantile Consulting Pty Limited, a copy of which is also annexed to Mr Savala's address, refers to his attendance at the address stated on the letter, to there being no response on the various occasions that he attended at that address (28, 29, 30 November 2010 and 1 December 2010) and that he observed "a pile mail (sic) in the letterbox for Donald (the first Defendant) and Fillboo" (identified earlier in other correspondence as the business formerly operated by the fifth Defendant).

1. It is clear that Mr Mullen did not serve the first Defendant, personally, with the letter dated 23 November 2010. It seems more likely than not, from the "Field Report" that the first Defendant was not at that address at the time Mr Mullen attended. In any event, there was non-compliance with UCPR rule 10(1)(c), which rule provides that a document may be served on a person by leaving a copy of the document, addressed to the person if the person is not an active party, at the person's business or residential address, with a person who is apparently of, or above, the age of 16 years and apparently employed or residing at that address.

1. There is no evidence at all about service of the letter dated 14 February 2011. Accordingly, it appears that the Plaintiff's legal representatives did not attempt to serve the original of that letter personally upon the first Defendant.

1. Neither does the evidence of Mr Savala, to which I have referred, establish service of the letters and/or the affidavits by post. In this regard, I refer to Northumbrian Ice Cream Co Ltd v Breakaway Vending Pty Ltd [2006] NSWSC 1216, in which Brereton J set out the requirements of an affidavit of service by post:

"[12] ... Proof of service by post requires, at least:

Proof that the envelope bore the correct name and address;

Proof that the envelope contained the relevant document to be served;

Proof that the envelope bore the correct cost of postage; and

Proof that the envelope was placed in the post.

[13] Precedents may be found in Neville & Ashe, Equity Proceedings with Precedents (NSW), Butterworths, 1981, precedent 19(2), Court Forms Precedents & Pleadings (NSW), "Service of Process", precedents 40.5, 40.15."

1. More recently, Barrett J in Brown v Bluestone Property Services Pty Ltd [2010] NSWSC 869, said:

"[12] The requirements for proof of service by post have been described in a number of recent cases to which Mr Hughes, counsel for the defendant, referred, specifically, Northumbrian Ice Cream Co Ltd v Breakaway Vending Pty Ltd [2006] NSWSC 1216; Dwyer v Canon Australia Pty Ltd [2007] SASC 100; Pearlburst Pty Ltd v Summers Resort Group Pty Ltd [2007] NSWSC 1126 and Grant Thornton (Qld) Pty Ltd v Green Global Technologies Ltd [2009] QSC 262.

[13] In order to prove service by post, it is necessary that the evidence of one or more witnesses establish a number of core and indispensable matters: that the document said to have been served by posting of it to a given address was placed inside an envelope, that the envelope had that address written or typed on its face, that a postage stamp or franking of the necessary amount was affixed to the envelope and that the envelope so addressed and stamped or franked was physically deposited in the post either at a post office or by being dropped into a post box for the reception of mail articles."

1. Also see my decision in Smirski v Macander [2010] NSWSC 929 and Renegade Rigging Pty Ltd v Hanlon Nominees Pty Ltd [2010] VSC 385.

1. The affidavit evidence relied upon by the Plaintiff says nothing about an envelope, about what appeared on the face of the envelope, or the placing of anything into an envelope (in particular, the specific affidavits referred to). There is only evidence of what appeared on each of the letters referred to.

1. Even if I were to accept that, inferentially, the evidence refers to the first Defendant's name and address on an envelope and that the copy affidavits were enclosed in that envelope, the affidavits say nothing about the stamp being placed on, or the franking of, either envelope, or the amount or value of any stamp, or franking, affixed to such envelope in each case. Nor does Mr Savala, or any other deponent, depose to handing over each stamped and addressed envelope at a post office, or depositing it, in each case, into a post box for the reception of mail articles. Nor does any affidavit state whether either letter has been returned.

1. There is no evidence of any of the processes within the Plaintiff's solicitor's office that could give me any proper basis for concluding that posting of the letters and the affidavits referred to in an envelope addressed to the first Defendant actually occurred.

1. Nor is there, in my view, sufficient evidence, otherwise, to lead me to draw any inferences as to the postage of the letters and the affidavits: Deputy Commissioner of Taxation v Clear Blue Developments Pty Ltd [2010] FCA 1223 at [27] - [34].

1. Mr Savala goes on to state in the affidavit:

"In circumstances where the first defendant has failed to defend the proceedings and where his wife ... was notified of the proceedings, the hearing on the assessment of damages should proceed in the absence of [the first Defendant]".

1. Whilst part of the words quoted is undoubtedly accurate (the failure to defend the proceedings), I do not know the factual basis for the assertion regarding the wife of the first Defendant being notified of the proceedings. In Mr Savala's affidavit, the only reference to any conversation with her, relates to her being informed of the mention of the matter on 1 February 2011.

1. Finally, there is no evidence of service by post, or otherwise, of any correspondence stating the date on which the trial of the assessment of damages, namely 16 June 2011, was to be heard.

1. In the circumstances set out above, I am not satisfied that the first Defendant was, or should have been, aware of the trial date, and also that he had knowledge or notice that the trial would then be proceeding. Nor am I satisfied that the letters and/or the affidavits upon which it was intended to rely have been brought to the attention, or notice, of the first Defendant. In these circumstances, I do not consider it is appropriate to proceed to hear the assessment of damages in his absence.

1. This conclusion may be reached in another way. I refer, again, to what was said by Ward J in In the matter of Anton Fabrications (NSW) Pty Ltd - Bentley Smythe Pty Ltd v Anton Fabrications (NSW) Pty Ltd at [12]:

"12 As noted in the commentary in Ritchie's, a party fails to appear, for the purpose of the Rule 29.7, if that party fails to provide the Court with an apparently credible explanation, for that non-attendance. By way of example of a lack of credible explanation reference is made to Magjarraj v Asteron Life Ltd [2009] NSWSC 1433 at [22] where the court had been provided with an inadmissible doctor's certificate asserting incapacity resulting from an undisclosed medical condition."

1. It seems to me to be an "apparently credible explanation for non-attendance" if it could be established that a defendant is unaware of the date of the trial. It cannot be said, in the present case, that the first Defendant was aware of, or otherwise had knowledge of, the date of trial, but chose not to attend court.

1. In those circumstances, also, I do not consider it is appropriate to proceed to hear the assessment of damages in the absence of the Defendant.

1. At the request of the Plaintiff, I adjourn the matter to the Registrar's List on Wednesday, 7 December 2011.

1. I make no order as to the Plaintiff's costs of today, to the intent that it will bear its own costs.

**********

Decision last updated: 29 June 2011